If the present value annuity factor is 3.8896,what is the present value annuity factor for an equivalent annuity due if the interest rate is 9%?
A)3.5684
B)4.2397
C)3.8896
D)5.3127

Question

Quizplus · Accepted Answer

The present value annuity factor for an equivalent annuity due is calculated by multiplying the present value annuity factor by the interest rate. 
PVAD factor = PVA factor x (1 + i)
PVAD factor = 3.8896 x (1 + 0.09)
PVAD factor = 4.2397 
Therefore, the answer is B.

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